California bill seeks to clarify mudslide insurance

As the mudslide cleanup continues in Montecito on Jan. 11, 2018, California Task Force 8 of San Diego searches a property for victims on East Valley Road.
JUAN CARLO/THE STAR

In this Wednesday, April 11, 2018, photo, a mangled car sits in a neighborhood devastated by a mudslide, in Montecito, Calif. Months after the mudslides nearly wiped the small community of Montecito off the map and killed multiple people, those who survived are still looking for and finding their belongings in the deep and hardened sludge.(Photo: Jae C. Hong, AP)

Insurance policies generally cover damage caused by fires but not by mudslides. That creates confusion in cases like the mudslides in Montecito, which were triggered by a wildfire.

In such cases where multiple factors combine to cause damage, courts have ruled that insurers must pay if the policy covers the "efficient proximate cause" — the most important cause — of the damage.

Most insurers have agreed to cover damage in Montecito, but Sen. Hannah-Beth Jackson thinks enshrining the existing legal doctrine in law would help future mudslide victims avoid prolonged fights with insurers.

"It is important that the insurance industry know very clearly, without equivocation, their responsibility to their policyholders that they must cover these costs," said Jackson, a Democrat from Santa Barbara.

Insurers oppose the bill. Their lobbyists say it goes further than the existing legal interpretation and might force them to cover losses they wouldn't otherwise have to cover. That could require them to raise their rates or decline to offer coverage in some areas, they say.

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Firefighters prepare to search a house surrounded by mud and debris on Sunday along Olive Mill Road in Montecito. Mud and debris flows unleashed early Tuesday when heavy rain hit hillsides scorched by the Thomas Fire. So far the fatal mudslide has left 20 people dead. Several are still missing.
GRETCHEN WENNER/THE STAR

A crew member from the Los Angeles Fire Department watches as firefighters search a house on Sunday along Olive Mill Road in Montecito. Twenty people are dead and several still missing after heavy rain in the Thomas Fire burn area unleashed massive mud and debris flows early Tuesday.
GRETCHEN WENNER/THE STAR

A worker tries to wrestle a shopping cart from the mud on Highway 101 in Montecito Sunday. The freeway that connects Santa Barbara and Ventura counties has been closed since deadly mud and debris flows unleashed by heavy rain hit the Thomas Fire burn area Jan. 9.
GRETCHEN WENNER/THE STAR

An excavator scooped rocks and mud from around a home on Glen Oaks Drive in Montecito Sunday. Boulders, trees and sludge-like mud roared into the neighborhood off East Valley Road Jan. 9 after heavy rain drenched hillsides with earth scorched by the Thomas Fire. Large boulders like the one seen at right were brought down creekbeds and canyons during the storm.
GRETCHEN WENNER/THE STAR

A man uses a jackhammer Sunday to help break up a boulder in Montecito's San Ysidro Creek. Huge boulders, trees and debris were carried down creek channels in the early hours of Jan. 9 after heavy rains pounded the Thomas Fire burn scar, creating deadly mud and debris flows.
GRETCHEN WENNER/THE STAR

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"When you put something in statute, any interpretation of the courts, they're going to presume that there's a change in law," said Armand Feliciano, vice president of government relations for the Property Casualty Insurers Association of America. "Otherwise why would the Legislature do it? Now you'll have other lawsuits that probably didn't need to happen."

The measure specifically says it's not intended to change existing law, but Feliciano said there could still be legal disputes over the meaning.

SB917 was approved in a 25-11 vote and goes next to the Assembly.

More than $421 million in insurance claims have been filed for residential and commercial losses related to the mudslides, Insurance Commissioner Dave Jones said last month.

Recently burned by California's largest recorded wildfire, the hillsides of Montecito northwest of Los Angeles could not absorb the rainstorm with an epic downpour of nearly an inch in 15 minutes early on Jan. 9.